Tim Resch

FTC Votes to Ban Noncompete Agreements

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Non-Compete Agreement

On April 23, 2024, the United States Federal Trade Commission voted 3-2 to issue a Rule banning all new noncompete clauses after the effective date of the Rule.  The Rule – if it goes into effect – would prohibit companies from entering into new noncompete agreements with all employees.  There is a carve out in the Rule for some existing noncompete agreements with “senior executives” (defined as employees in a “policy-making position” who earn more than $151,164 per year).  The Rule also has an exemption for business owners who sell their company.

Under the Rule, companies with existing noncompete agreements are required to provide a notice to employees who have noncompete agreements that the agreements are no longer enforceable and will not be enforced by the company.

The U.S. Chamber of Commerce issued a statement shortly after the FTC vote, criticizing the Rule as “not only unlawful but also a blatant power grab that will undermine American businesses’ ability to remain competitive.”  The Chamber of Commerce statement indicates that it will be filing a lawsuit to block the Rule.

If not blocked by litigation, the Rule will go into effect 120 days after it is published in the Federal Register, likely meaning early September 2024.

Currently, noncompete agreements are mainly subject to applicable state law in most jurisdictions.  Some states (like Oregon) have specific statutes with restrictions on which employees can be subject to noncompete agreements.  Companies should consult with their employment attorney to determine how best to proceed in light of the new FTC Rule.

Your Employees’ Workday May Begin Sooner Than You Think

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When a workday begins can depend on the type of work performed and necessary steps to start the work each day. But with the ever-growing presence of computer software use in the workforce, can starting up and shutting down a work computer add some extra time to a paycheck? The U.S. Ninth Circuit Court of Appeals says that it is possible.

While many may be quick to compare starting up computers to waiting in line to punch a timecard, the Ninth Circuit ruled that for the call service employees at Connexx, the two are entirely different. In Cadena v. Customer Connexx LLC., decided October 24, 2022, call service employees claimed they should be compensated under the Fair Labor Standards Act (“FLSA”) for the additional 18.9 minutes it takes for their computers to turn on and off each day. Relying on the FLSA and the Portal-to-Portal Act, the Ninth Circuit found that booting up work computers could be compensable time, but shutting the computers down should not.

In specific situations, turning on computers each day can now be likened to the donning and doffing of protective gear. Without the use of functioning computers, the Ninth Circuit concluded that Connexx employees could not access any of the programs necessary to answer customer calls and perform scheduling tasks, the employees’ principal duties. Thus, the time spent starting up their work computers is integral and indispensable to the employees’ principal duties and should be compensated.

This case is a good reminder to all employers that under the FLSA, you are required to pay employees starting at the time of the first principal activity of the day. However, time that passes while the employee is waiting to begin their first activity of the day is not always compensable. For activities to be principal, and thus compensable, they must be integral and indispensable to the employee’s work. In today’s world, it isn’t as easy to determine when compensable time begins as it once used to be. With the days of punching in a timecard and walking straight to a workstation mostly behind us, employers should be aware of what tasks are integral and indispensable to their employees’ job performance and ensure they are compensating them appropriately.

Important Changes to Oregon’s Safe Employment Act

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On June 15, 2021, Governor Kate Brown signed and enacted Senate Bill 483 into law, amending the Oregon Safe Employment Act (OSEA) to include a significant new protection for employees alleging claims for employment discrimination and retaliation under the Act. Previously, if an employee brought an action alleging discrimination or retaliation under the Act, the burden ultimately rested on the employee to prove that the action taken by the employer was discriminatory or retaliatory. However, the amended law now shifts that burden of proof on the employer—that is, depending on the timing of the employer’s alleged adverse actions.

Effective immediately, ORS 654.062(7)(a) provides that in any action brought for discrimination or retaliation under the Act, there is now a rebuttable presumption that a violation has occurred “if a person bars or discharges an employee or prospective employee from employment or otherwise discriminates against an employee or prospective employee within 60 days after the employee or prospective employee has engaged in . . . protected activities[.]” ORS 654.062(7)(a) (emphasis added). Protected activities include expressing opposition to unsafe workplace practices, filing complaints, initiating proceedings, and reporting assaults that take place on the premises. As noted above, under this new provision the person accused of violating the Act bears the burden of persuasion and may rebut the presumption that a violation has occurred only by demonstrating, by a preponderance of the evidence, that the alleged adverse employment action was not discriminatory or retaliatory.

In addition, Senate Bill 483 included an emergency clause and a provision that the rebuttable presumption applies retroactively to complaints that have not been issued a final decision by BOLI as of June 15, 2021. Thus, on July 19, 2021, BOLI announced that it would be implementing new rules to respond to complaints made under the new measure, and “complaints that meet the criteria of the measure must now be investigated based on the rebuttable presumption, thus shifting the burden of proof and the investigatory process of the Civil Rights Division (CRD).” By enacting temporary rules, BOLI now has the ability to immediately respond and investigate complaints brought in accordance with Senate Bill 483.

Still, the new legislation does not modify existing law with respect to adverse actions occurring more than 60 days after an employee has engaged in a protected activity. ORS 654.062(b) (stating “[i]f a person bars or discharges an employee or prospective employee from employment or otherwise discriminates against the employee or prospective employee more than 60 days after the employee or prospective employee has engaged in any of the protected activities . . .  such action does not create a presumption in favor of or against finding that a violation . . . has occurred.”) (emphasis added). In those circumstances, the burden remains on the employee or prospective employee to establish a causal link between an employer or prospective employer’s adverse action and the protected activity.

Notably, prior to the enactment of this legislation, employees could frequently create a triable question of fact regarding an employer’s alleged retaliatory intent by establishing a proximate temporal link between an employee engaging in a protected activity and an employer’s adverse employment action. However, this new law will have a significant impact on litigation moving forward. in that the burden is now presumptively on employers to show that adverse actions were based on legitimate, nonretaliatory reasons when taken within two months of the employee engaging in a protected activity. Thus, moving forward, employers may want to consider carefully evaluating the timing of any disciplinary actions for employees, and maintaining detailed documentation in support of any disciplinary action taken after an individual has engaged in a protected activity under the Act.

Changes Coming to Oregon Noncompete Agreements

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Changes Coming to Oregon Noncompete Agreements

On May 21, 2021, Oregon Governor Kate Brown signed Senate Bill 169, amending Oregon’s statute governing employee noncompete agreements, ORS 653.295. Effective January 1, 2022, employee noncompete agreements entered on or after that date will need to comply with four notable changes under the modified statute.

Unlawful Noncompetition Agreements are Void Instead of Voidable

Under the current version of ORS 653.295, a noncompete agreement that fails to satisfy the requirements of the statute is voidable rather than void—meaning that an employee bears the burden of taking some affirmative step to demonstrate their intent to void an unlawful noncompete agreement. Under the new iteration of the statute, noncompete agreements that fail to comply with all of the requirements of ORS 653.295 will be rendered “void and unenforceable,” regardless of what steps an employee does or does not take to void the unlawful agreement.

Revised Minimum Salary Requirements

Currently, for a noncompete agreement to be valid, employees must earn a salary that exceeds the median income for a four-person family, as determined by the U.S. Census Bureau. Moving forward under the amended statute, an employee’s annual gross salary must exceed $100,533 at the time of the employee’s termination, and this compensation amount will be adjusted annually for inflation.

Reduced Limit on Post-Employment Restriction Period

The current maximum period for post-employment restrictions in a noncompete agreement is 18 months, and any restricted period that exceeds 18 months is voidable rather than void. With the amendments to the statute, the period for post-employment restrictions is limited to 12 months, and any post-employment restriction period that exceeds 12 months is rendered void and unenforceable.

“Garden Leave” Option for Non-Qualifying Employees

Under the current statute, an employer can impose a noncompete agreement on an otherwise non-qualifying employee—that is, an employee that is not paid on an exempt, salary basis, or an employee who is not paid the statutory minimum compensation mentioned above—by use of the statute’s “garden leave” option. Using this option, an employer can unilaterally enforce a noncompete agreement on a non-qualifying employee by paying the employee during the restricted period: (1) a minimum of 50% of the employee’s gross annual salary at the time of the employee’s termination; or (2) 50% of the median income for a four-person family, as determined by the U.S. Census Bureau.

The option to enforce noncompete agreements against non-qualifying employees remains available to employers under the amended statute. To exercise this option an employer will need to confirm, in writing, payment to the employee that is the greater rate of either: (1) 50% of the employee’s gross annual salary at the time of the employee’s termination; or (2) 50% of $100,533, as adjusted for inflation.

Outside of the amendments, several existing limitations on noncompete agreements will remain unchanged under the new version of ORS 653.295. These continuing limitations include—among others—a requirement to notify employees in writing two weeks before the first day of employment that a noncompetition agreement is required as a condition of employment, and providing the employee with “a signed, written copy of the terms of the noncompetition agreement” within 30 days of termination of employment.

Finally, the limitations set out by ORS 653.295 do not apply to all types of restrictive employment agreements. Most notably, under the current and amended statute, the law only applies to employee noncompete agreements and does not apply to confidentiality agreements or agreements not to solicit an employer’s customers or employees.

Workplace Vaccination Requirements

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Workplace Vaccination Requirements

What You Need to Know About Workplace Vaccination Requirements

Workplace Vaccination RequirementsNow that the first round of COVID-19 vaccines is being distributed, many of people are wondering how to ensure that their employees are vaccinated as soon as possible. Below are answers to some of the most common questions employers have about workplace vaccine requirements. If you would like specific advice about instituting a vaccine requirement for your employees, please contact an employment lawyer.

Can I require that my employees take the vaccine when it becomes available?

Yes. In general, you can have a requirement that your employees take a publicly available vaccine. However, employers with 15 or more employees are subject to federal laws prohibiting certain employment practices, including requirements that screen out individuals with disabilities and denying requests for reasonable accommodations based on religious beliefs. Many states have equivalent laws that cover smaller employers. Most employers must try to make reasonable accommodations for employees whose disability or religious beliefs prevent them from meeting workplace requirements.

How can I respond if an employee claims to be unable to take the vaccine because of a disability or sincerely held religious belief?

You must determine whether you are required to make a reasonable accommodation for the employee. Unless an employer can demonstrate that a reasonable accommodation is not possible without undue hardship and that an unvaccinated employee poses a direct threat to the health of others, the employer must make a reasonable accommodation for an employee’s disability. An employer also must make a reasonable accommodation for an employee’s religious belief if the accommodation is possible without undue hardship.

In either case, an employer may exclude from the workplace an unvaccinated employee for whom the employer is not required to make reasonable accommodation. 

What does reasonable accommodation mean for workplace vaccination requirements?

Whether you can make a reasonable accommodation without undue hardship will depend on the nature of the workforce and the employee’s position. In determining whether an exemption causes undue hardship, you should consider whether the employee’s duties require frequent contact with the public or other individuals whose vaccination rates are unknown and the cost to the business of reducing such contact. Employers may also rely on CDC and OSHA guidance to determine whether an accommodation is possible without undue hardship.

Federal regulations direct employers to determine whether a direct threat exists based on the likelihood and extent of the risk. Like undue hardship, whether your employee constitutes a “direct threat” will depend on the employee’s duties and the progress of the pandemic. As infection rates fall, the likelihood that an unvaccinated employee will constitute a direct threat to others in the workplace may fall.

Employment protections based on religious belief are narrower than protections based on disability. An employer still must provide a reasonable accommodation upon request. However, undue hardship in the religious belief context means that the accommodation would have a more than trivial burden on the employer, such as forcing the employer to treat employees unequally. Employers may not be required to make an accommodation for religious belief if the accommodation is unfair to other employees or forces you to incur significant costs.

As the COVID-19 vaccines become more available, employers will certainly face more pressing questions about requiring employees get the vaccine. 

Naturally, many of these questions are novel, and there are complex legal issues employers need to consider.  There are also practical considerations – what will the impact be on morale of requiring (or not requiring) employees to provide proof of vaccination.  Employers with specific questions should seek guidance from an attorney with experience in employment matters.

Oregon Health Authority Orders New Statewide Face Covering Guidance

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As COVID-19 continues to impact our daily lives, Governor Kate Brown has authorized the Oregon Health Authority (OHA) to create new guidance on masks, face coverings and face shields (collectively referred to as “face coverings”). On August 13, 2020, masks, face shields, and face coverings became required statewide for offices and indoor public spaces and in outdoor public spaces when physical distancing is not possible.

All patrons (employees, contractors, volunteers, customers and visitors) of a business, indoor public space or outdoor public space are now required to wear a mask, face shield or face covering at all times, with the following exceptions:

  • For employees, contractors and volunteers, face coverings are not required when at or in a location where the employee, contractor or volunteer does not have a job that requires interacting with the public and at least six feet of distance can be maintained between individuals. In areas where six feet of distance cannot be maintained, face coverings are still required.
  • Face coverings are not required while eating or drinking.
  • Face coverings are not required when engaged in an activity that makes wearing one not feasible. The example provided by the Oregon Health Authority is swimming.

Additionally, businesses are required to provide masks, face shields or face coverings for employees and to accommodate employees, contractors, customers and visitors when accommodations are required by the ADA, labor laws at the state or federal level, public accommodations laws at the state or federal level and applicable OHA public health guidance. Businesses are also required to post clear signs about the face covering requirements.

The OHA also recommends but does not require that such entities provide face coverings for customers and visitors who do not have one at no cost to the customers and visitors, to post signs about the requirements in languages commonly spoken by customers and visitors, and to educate employees on how to safely work and communicate with people who need to read lips or facial expressions to communicate through the use of transparent face coverings.

Face coverings are required at all times for employees in hallways, bathrooms, elevators, lobbies, break rooms, and other common spaces in both public and private office spaces. If an individual workspace or meeting room allows for the maintenance of a consistent six feet of distance between people, individuals can remove their face covering in those areas.

All individuals who visit a business or a public space are required to wear a mask, face shield or face covering unless they are under five years of age with the following exceptions:

  • Face coverings are not required while eating or drinking
  • Face coverings are not required when engaged in an activity that makes wearing a mask not feasible, such as when swimming.
  • Face coverings can be briefly removed where an individual needs to confirm their identity by visual comparison, such as at a bank or when interacting with law enforcement.

If an individual has a medical condition or disability that makes it hard to breathe or wear a mask, they can request an accommodation from a business or public space operator to enable full and equal access to the services, transportation and facilities open to the public.

As these unprecedented times continue to unfold, we must all do our part to follow state guidance and reduce the spread of COVID-19. More information and OHA Guidance can be found here.

A civil litigator with an impressive local and international history, Timothy Resch helps employers and small businesses find success in federal and state court litigation matters.

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